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HMRC internal manual

Bank Levy Manual

HM Revenue & Customs
, see all updates

Chargeable equity and liabilities: excluded equity and liabilities: Tier 1 capital

Paragraph 30 of Schedule 19

The bank levy base excludes Tier 1 capital in order to encourage highest quality capital accumulation. This follows the IMF recommendations and complements the wider regulatory reform agenda, including moves to strengthen capital requirements.

The forms of capital that qualify for Tier 1 capital are based on regulatory terms, in particular those set out in the capital resources table (see Table 2 Annex 2R Capital resources table for a bank; the FSA Handbook). These include, for example, share capital, reserves, partnership and sole trader capital, verified interim net profits, permanent interest bearing shares for building societies and, for a mutual, the initial fund plus permanent members’ accounts

The amount of Tier 1 capital allowed as excluded equity and liabilities for the purposes of bank levy is the figure (‘D’); (the total Tier 1 capital before the deductions shown in Table 2) shown in Annex 2R. Thus the figure to be excluded for bank levy purposes will be the figure before any deductions (for example for intangible assets) have been applied to those amounts.

But it should be noted that as the exclusion is from equity and liabilities only items that are included in equity and liabilities on the relevant balance sheets can be excluded.

See FSA Table (web) (

Foreign entities are required to calculate their Tier 1 capital on the same basis, that is to calculate the amounts that would be treated under the FSA Handbook as Tier 1 capital before deductions of the entity or the group as at the end of the chargeable period.